Tuesday, March 22, 2011

Telesat Sale (or Recapitalization) Near (or Not).

The March 16th, 2011 New York Post article "Satellite outfit may nix buyout" suggests that the long anticipated sale of Canadian telecommunications icon Telesat could instead turn into a recapitalization. According to the article:
Telesat HQ in Ottawa.
A bidding group that includes Blackstone, KKR and Providence Equity is set to make a binding bid next week of between $6 billion and $7 billion for satellite company Telesat -- but Telesat might short-circuit that deal and instead borrow money itself and give shareholders a dividend, a source close to the situation said.
The Post article goes on to state that "the banks considering financing the deal are nervous about underwriting a buyout that may take up to a year to receive regulatory approval, especially considering this week's market fall, the source said."

The Post, being focused on New York and the United States might have forgotten to mention all the fuss and bother in Canada surrounding the federal budget, which is widely expected to lead to lead to a parliamentary non-confidence vote and a follow-up election in May 2011. Any potential Telesat sale to a non-Canadian firm could very easily become an election issue, which is a prospect that no sensible banking or telecom executive would ever relish.

According to the March 3rd, 2011 Ottawa Business Journal article "Telesat closes 'very good year', remains mum on IPO" Telesat's net income:
... was $228 million in 2010, with a foreign exchange gain of $164 million, compared with income of $431 million in 2009 on a foreign exchange gain of $335 million. The company also reported an $11 million loss on financial instruments that partially offset the lesser foreign exchange gain, compared with a $117 million loss in 2009.
Since 2007 New York-based Loral Space and Communications has owned 64 percent of Telesat with the Canadian crown corporation Public Pension Investment Board owning the rest. However, final voting control remains with the Canadian crown corporation.

Telsat is the world’s fourth- largest satellite company and one of the "Three Kings" of Canadian commercial space activities.

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